GM bondholders balk at plan; bankruptcy now likely
DETROIT (AP) -- A General
Motors Corp. bankruptcy filing seemed inevitable after a rebellion by its
bondholders forced it to withdraw on Wednesday a plan to swap bond debt for
company stock.
GM has until Monday to
complete a government-ordered restructuring that includes debt reduction, labor
cost cuts and plant closures. But a Chapter 11 reorganization is likely after
the company said its offer to exchange $27 billion in unsecured debt for 10
percent of the company's stock had failed.
GM has received $19.4
billion in federal loans. The Monday deadline was set by the government and
includes debt reduction, labor cost cuts and plant closures.
April existing home sales
inch upward, prices fall
WASHINGTON (AP) -- Buyers
who were brave enough to dive into the market for a bargain-priced house helped
provide a modest boost to sales last month.
Sales of inexpensive
foreclosures and other distressed low-end properties have even sparked bidding
wars in places like Las Vegas, Phoenix and Miami. But the market for high-end
properties is at a virtual standstill, mainly because it remains difficult to
get a mortgage for expensive homes.
The National Association of
Realtors said Wednesday that home sales rose 2.9 percent to an annual rate of
4.68 million in April from a downwardly revised pace of 4.55 million in March.
Slumping Treasury bond
prices send stocks lower
NEW YORK (AP) -- The stock
market put its rally back on hold as investors grew worried about rising
borrowing costs.
The Dow Jones industrial
average fell nearly 175 points Wednesday, erasing most of a rally from the day
before as a jump in government bond yields fanned worries that higher interest
rates will sap strength from the economy.
A steep drop in the price of
the benchmark 10-year Treasury note pushed its yield up to 3.72 percent, up
from 3.55 percent late Tuesday and to the highest level since November.
The Dow lost ground for the
fifth time in six days, falling 173.47, or 2.1 percent, to 8,300.02 after
rising 196 points on Tuesday.
Banks earned $7.6B in 1Q
after record loss in 4Q
WASHINGTON (AP) -- The
nation's banks turned a profit in the first quarter, but the number of problem
banks jumped to the highest level in 15 years and tough conditions persist for
the industry, the government said Wednesday.
The Federal Deposit
Insurance Corp. said higher trading revenues and lower borrowing costs at big
banks helped the industry earn a $7.6 billion profit in the January-March period,
compared with a record loss of $36.9 billion in the fourth quarter. The profit
was 61 percent below the $19.3 billion earned in the year-earlier period and
followed the first quarterly loss in 18 years.
Saudis say no OPEC oil
production cut needed
VIENNA (AP) -- Oil
powerhouse Saudi Arabia spoke out Wednesday against reducing OPEC's output --
the latest sign that the 12-nation cartel will keep production at present
levels. But instead of falling on the news, crude prices climbed to six-month
highs.
Even before Saudi Oil
Minister Ali Naimi spoke, the recent jump in oil prices was working against
hardline OPEC members who were advocating even costlier crude. Naimi's comments
reinforced expectations that OPEC oil ministers meeting Thursday would decide to
not change oil production levels. The Saudis account for close to a third of
OPEC's total production and what they say is usually informal policy for the
rest of bloc.
Staples profit falls 33
percent in 1st quarter
CHICAGO (AP) --
Recession-weary customers are still putting off big-ticket purchases from
office-supply chain Staples Inc., but the retailer said it's beginning to see
smaller declines in foot traffic and sales to small businesses.
The chain's tepid
first-quarter results, released Wednesday, show the limping U.S. economy may
finally be digging itself out of its slump by the end of the year, executives
said Wednesday.
For the three months that
ended May 2, Staples earned $143 million, or 20 cents per share. That's down
from the previous year's profit of $212.3 million, or 30 cents per share.
Germany races to secure
future of Opel
BERLIN (AP) -- Germany
pressed for an independent future for General Motors Corp.'s Europe-based Opel
unit on Wednesday, with the country's foreign minister saying "the lights
must not go out" as its U.S. parent headed for a likely bankruptcy filing.
Chancellor Angela Merkel and
several ministers gathered for talks at Merkel's Berlin office with
representatives of GM, the U.S. government and Opel's suitors, as well as governors
of German states that have Opel plants, aimed at putting Opel on the road to
safety.
Chrysler in court for key
bankruptcy hearing
NEW YORK (AP) -- The future
of Chrysler hung in the balance Wednesday as it made its case in bankruptcy
court to sell the bulk of its assets to a group headed by Italy's Fiat in hopes
of saving itself from liquidation.
Attorneys for Chrysler LLC
maintain that the deal with Fiat Group SpA, which is being pushed by President
Barack Obama's administration, is the company's only hope to avoid being sold
off piece by piece, but the proposed sale remains controversial with hundreds
of objections filed by the automaker's dealers, bond holders, former employees
and others.
BofA boosts capital by $5.9B
via share exchange
NEW YORK (AP) -- Bank of
America Corp. said Wednesday it raised $5.9 billion through the conversion of
preferred shares for common stock as part its plan to bolster its capital base.
The federal government told
the Charlotte, N.C.-based bank that it should raise $33.9 billion in capital to
boost its reserves in case the economy worsens further. As part of its
"stress tests" of 19 banks, the government said Bank of America
needed the most additional cash to withstand a potentially worsening economy.
Survey: Most economists see
recession end in '09
WASHINGTON (AP) -- More than
90 percent of economists predict the recession will end this year, although the
recovery is likely to be bumpy.
That assessment came from
leading forecasters in a survey by the National Association for Business
Economics released Wednesday. It is generally in line with the outlook from
Federal Reserve Chairman Ben Bernanke and his colleagues.
About 74 percent of the
forecasters expect the recession -- which started in December 2007 and is the
longest since World War II -- to end in the third quarter. Another 19 percent
predict the turning point will come in the final three months of this year, and
the remaining 7 percent believe the recession will end in the first quarter of
2010.
By The Associated Press
The Dow lost ground for the
fifth time in six days, falling 173.47, or 2.1 percent, to 8,300.02 after
rising 196 points on Tuesday. The Standard & Poor's 500 index fell 17.27,
or 1.9 percent, to 893.06, and the technology-laden Nasdaq composite index fell
19.35, or 1.1 percent, to 1,731.08.
Benchmark crude for July
delivery rose $1 to settle at $63.45 a barrel on the New York Mercantile
Exchange.
In other Nymex trading,
gasoline for June delivery rose 3.93 cents to settle at $1.8917 a gallon and
heating oil rose 1.64 cents to settle at $1.5617 a gallon. Natural gas for July
delivery fell less than a penny to settle at $3.638 per 1,000 cubic feet.
In London, Brent prices rose
$1.26 to settle at $62.50 a barrel on the ICE Futures exchange.